Mboweni puts dire financial metrics on the table ahead of Moody’s review

Finance Minister Tito Mboweni and Reserve Bank Governor Lesetja Kganyago.
PHOTO: Supplied/GCIS

PARLIAMENT – Finance Minster Tito Mboweni on Wednesday laid bare the grim metrics of the country’s finances, with growth expectations slashed to 0.5 percent for the year, in a medium-term budget policy statement tabled two days before Moody’s will indicate if it is ready to maintain South Africa’s last investment-grade credit rating.

The minister put the consolidated budget deficit at 5.9 percent of GDP for the year and told members of Parliament (MPs): “Clearly, we need to do things differently. This is a serious position to be in…. there is no status quo option!”

Crucially, he warned that carrying on in the current mode would see the debt to gross domestic product (GDP) ratio cross another danger line of 70 percent by 2022/23. 

Had planned savings of R250 billion materialised, it would have contained this to a relatively “sweet spot” of 64 percent. The only way forward now was belt-tightening, Mboweni said.

“The consequence of not acting now would be gravely negative for South Africa. Over time, the country would likely face mounting debt service costs and higher interest rates and may enter a debt trap.”

Source: iol.co.za